Another Day, Another Gold Price Record

The spot price of gold set a fresh intraday record before pulling back, and analysts and traders remain confident that a move above $1,500 a troy ounce is fast approaching.

Silver prices also continued their climb.

“Faced with [a] host of gold-friendly factors, along with elevated oil prices and ongoing inflation concerns, gold is carving out a bigger share of investor interest this month than it has done all year,” said UBS analyst Edel Tully in a note.

Such friendly factors include a weaker dollar and the U.S. Federal Reserve’s apparent lack of agreement on U.S. monetary policy, she said. That spurred the bank on Monday to raise its one-month gold forecast to $1,500 an ounce from $1,450 an ounce.

Ahead of the New York day, spot gold was down $6.60, or 0.4%, at at $1,468/40 an ounce. It traded as high as $1,476.37.

Spot silver also rallied to a fresh 31-year high of $41.96 an ounce. Ahead of the New York day, it was at $41.28, up 35 cents or 0.9%. But while the metal continues its parabolic uptrend, traders and analysts warned that the metal’s rapid ascent—and the resulting low ratio of gold-to-silver prices—makes the metal vulnerable if speculative buyers having a shift in mood.

“It’s very tough to pick a top for silver or gold at the moment, as all short- and medium-term factors seem bullish again,” said a trader. But the higher silver rallies, the more violent a correction could be, he warned. “If liquidity thins, silver could drop very quickly,” he said.

Silver has surged 34% this year, driven largely by speculative and technical buying rather than industrial demand.

But as it gets less affordable, bargain hunters turn, warned UBS’s Ms. Tully.

“So far the temptation to sell has been kept at bay, but at nearly $42/oz today versus $38.oz last Monday, silver is richly priced,” she said.

In other metals, spot platinum was down $7, or 0.4%, at $1,802 an ounce, and palladium was down $4, or 0.5%, at $791 an ounce.

(Source: http://www.midasletter.com/index.php/another-day-another-gold-price-record/)